German industry orders slump on weak euro zone demand, outlook subdued

BERLIN (Reuters) – German industrial orders unexpectedly plunged in December on weaker demand from other euro zone countries, data showed on Thursday, suggesting that a manufacturing slump will continue to hamper overall growth in Europe’s largest economy.

Contracts for ‘Made in Germany’ goods fell by 2.1% from the previous month, the Statistics Office said. That was the biggest drop since February and compared with the Reuters consensus forecast for a 0.6% rise.

“The orders situation remains terrible,” said Bankhaus Lampe economist Alexander Lampe. “The coronavirus means that we’ll probably have to keep waiting for a turning point.”

The reading for November was revised up to a drop of 0.8% from a previously reported fall of 1.3%.

Commenting on the figures, the Economy Ministry said major fluctuations in foreign demand for large transport equipment accounted for about a third of the drop in demand in December.

“Overall, the outlook for the industrial economy remains subdued,” the ministry added.

The German economy narrowly dodged recession last year, and the Ifo institute’s monthly survey last week showed business morale weakening, suggesting the economy got off to a slow start in 2020.

Germany’s export-dependent manufacturers are struggling with sluggish demand from abroad as well as business uncertainty linked to trade disputes and Britain’s decision to leave the European Union.

Chancellor Angela Merkel’s ruling coalition is at odds over how to spend the federal government’s budget surplus of 13.5 billion euros. Her conservatives are calling for corporate tax cuts, while centre-left Finance Minister Olaf Scholz favors more public investment.

Source: Read Full Article